The Metropolitan Transportation Authority is spending $110 million to rehabilitate the bustling Jay Street subway station, but it is content to treat the hub’s entryway as an ugly stepchild.

The transit agency said this week that it will not repaint the peeling ceilings on either exit on the west side of Jay Street between Willoughby Street and Myrtle Avenue, leaving a moonscape of potentially toxic paint chips raining down.

Transit spokeswoman Deirdre Parker insisted that the areas in question are safe, noting that the ceiling was re-painted in the 1990s with a non-lead-based paint.

But even so, the agency regards the situation as dangerous: Above-ground station cleaners are instructed to sweep the courtyard area with wet cloths and a HEPA vacuum — which contain specialized filters to trap dangerous lead particles, which can cause serious health problems.

“It’s just a precaution in case there are previous coats of lead-based paint underneath,” explained Parker. The agency has not provided straphangers with masks or HEPA filters.

The ceiling work is not included in the current rehab plan, which will be completed by August, 2011. Transit officials said that intra-agency discussions are underway to try to secure funding for the paint job — but could not provide a cost estimate or a time frame for the work, vexing area business leaders.

“If this was Midtown Manhattan, I’m not sure we’d be having this conversation,” said Joe Chan, president of the Downtown Brooklyn Partnership, a quasi-governmental group.

Straphangers were equally disgusted.

“They need to fix it — it’s not healthy,” said commuter Anjell Bowers. If Jay Street were Wall Street, it is unlikely the ceilings would be left to deteriorate, she added.

“But Wall Street is where the money is.”

Commuter Norman Chan agreed.

“If this was an apartment building, this would be a major housing violation,” he charged. “You wouldn’t rent a place that looked like this.”

The shoddy courtyards are a part of 370 Jay St., a building owned by the city and leased to the MTA. Under the terms of the lease agreement, building maintenance is the responsibility of Transit, which was once headquartered in the 13-story eyesore.

Chan has been pushing for the sale of the building so that small businesses and a retail strip could move in, but the MTA balked, saying it plans to eventually renovate the space and consolidate its operations there. For now, the building remains vacant, surrounded by scaffolding and swaddled in black netting — in anticipation of interior renovations that are at least two years away.

“The MTA has to stop blighting the neighborhood through its neglect of this building,” Chan said, adding that the investment the agency made to rehabbing the station justifies cleaning up the exterior. “Saying this sticks out like a sore thumb is a huge understatement.”